Dynamic multi-modal transportation problem

In recent global business, transportation costs have increased due to the dispersed location of manufacturing and distribution facilities all over the world. For longer distances, multi-modal transportation of roads, rails, ships, and planes is necessary to save on transportation costs. Given an origin and a destination, multiple routes are available, with respective lead times and unit transportation costs. In this study, we propose a heuristic solution procedure for a dynamic multi-modal transportation problem, where we determine the shipping amount for each route at the beginning of every period so as to minimize the total cost, while maintaining a specific level of customer service against the varying demand for a single product. Computer simulation is used to explore the behavior of the proposed algorithm.